Correlation Between Sunny Optical and Tencent Music
Can any of the company-specific risk be diversified away by investing in both Sunny Optical and Tencent Music at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sunny Optical and Tencent Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunny Optical Technology and Tencent Music Entertainment, you can compare the effects of market volatilities on Sunny Optical and Tencent Music and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sunny Optical with a short position of Tencent Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and Tencent Music.
Diversification Opportunities for Sunny Optical and Tencent Music
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sunny and Tencent is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and Tencent Music Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tencent Music Entert and Sunny Optical is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sunny Optical Technology are associated (or correlated) with Tencent Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tencent Music Entert has no effect on the direction of Sunny Optical i.e., Sunny Optical and Tencent Music go up and down completely randomly.
Pair Corralation between Sunny Optical and Tencent Music
Assuming the 90 days horizon Sunny Optical Technology is expected to generate 1.17 times more return on investment than Tencent Music. However, Sunny Optical is 1.17 times more volatile than Tencent Music Entertainment. It trades about 0.23 of its potential returns per unit of risk. Tencent Music Entertainment is currently generating about 0.04 per unit of risk. If you would invest 585.00 in Sunny Optical Technology on September 20, 2024 and sell it today you would earn a total of 225.00 from holding Sunny Optical Technology or generate 38.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunny Optical Technology vs. Tencent Music Entertainment
Performance |
| Timeline |
| Sunny Optical Technology |
| Tencent Music Entert |
Sunny Optical and Tencent Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Optical and Tencent Music
The main advantage of trading using opposite Sunny Optical and Tencent Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical position performs unexpectedly, Tencent Music can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Tencent Music will offset losses from the drop in Tencent Music's long position.| Sunny Optical vs. KIMBALL ELECTRONICS | Sunny Optical vs. TT Electronics PLC | Sunny Optical vs. ARROW ELECTRONICS | Sunny Optical vs. ULTRA CLEAN HLDGS |
| Tencent Music vs. ADRIATIC METALS LS 013355 | Tencent Music vs. Tower Semiconductor | Tencent Music vs. Pembina Pipeline Corp | Tencent Music vs. BORR DRILLING NEW |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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